The wrong way to hire
In the Harvard Business Review article “Your Approach to Hiring Is All Wrong,” author Peter Cappelli writes: “Businesses have never done as much hiring as they do today. They’ve never spent as much money doing it. And they’ve never done a worse job of it.”
I agree. And to build on the highly respected and trusted reporting in this article, I’d like to offer additional insight about hiring, based on my experience working with middle-market companies.
To set the stage, I have to point out the variables shaping today’s hiring environment: There are currently more jobs than there are people to fill them. If you’re in the C-suite, hiring talent is your No. 1 concern and the biggest threat to your business. To compete in this market, you have to change the way you find and keep your people. There is no going back.
What you need to change first
If you’re still relying on the old “post and pray” approach to recruitment — where you place an ad for an opening and hope someone applies — that’s got to be your first change initiative. It no longer works. Last year, the majority of people who changed jobs weren’t searching for one, according to the HBR article. Companies reached out and pulled in these highly valued “passive” candidates before they even thought about checking ads.
Increasingly, companies prefer to hire external people rather than hire from within, often because of the mistaken belief that they’ll get experienced people who can hit the ground running and save the cost of training. In reality, cultural misfits and accompanying disruption can be equally or more costly than hiring from within, along with the possible loss of employees interested in advancement.
Start measuring what you’re doing
In an effort to attract the best possible hires, companies often use tactics like advertising jobs that don’t exist; using recruitment-process-outsourcing providers to scour LinkedIn and social media for potential candidates; and turning to vendors who use “an array of smart-sounding tools” to predict who will be the best candidate for the job. The fees associated with these services add up: On average, the cost of hiring per job is $4,129, and many thousands more for higher level positions. Plus, companies pay a total of $20 billion to human resources vendors, mostly for hiring.
As Cappelli says, “Employers are obsessed with new technologies and driving down costs.” Yet, amazingly, it’s the rare few that carefully measure the results of their recruiting practices. How many people did we hire externally versus internally? Who stays the longest and performs the best? What was the difference in cost-per-hire and time-to-hire? What sources/colleges produced the best candidates? What marketing tactics are most successful in attracting candidates? Which assessments provide the most accurate and useful information? What part does our brand play in recruitment? Are we winning great candidates who become great employees?
The fact is, we don’t know the answers unless we measure them. How can companies spend so much money on something this critical and not bother to check whether it actually works? Yes, measuring can be hard, but you can start by focusing on the easiest things to measure — like absentee rates, results of performance reviews and retention levels — and branch out from there. One thing is for sure: You’ll quickly become addicted to the knowledge and payoffs.
What hiring should look like
Cappelli offers a number of ways that you can improve your hiring process. I’ll share a five of them and add my thoughts.
- Don’t post phantom jobs. Posting fake jobs or leaving ads posted long after jobs are filled is not best practice. Recruitment is a sales process and you should always be cultivating for candidates. This eliminates the need to post jobs that don’t exist. Besides, there’s an ethics aspect to lying to candidates. Make sure your process matches your values and expect the same from your candidates. Truth on both sides means better outcomes.
- Design jobs with realistic requirements. Don’t rely on tracking software and keywords. You need a human component to ensure that you post realistic expectations, requirements and compensation that attract the right candidates. At the same time, your job descriptions should be compelling and create excitement about working for you and contributing in a meaningful way to what you do. Make them both realistic and visionary. (That’s possible to do!)
- Reconsider your focus on passive candidates. There are many good places to source candidates and you should use a mix of them all: employee referrals, current “internal” employees, “passive” and active external people, job boards, inside and outside recruiters, and social and professional networks. One size does not fit all. Someone could be a great fit for your needs today but not tomorrow. Alignment, timing, fit — there’s much to consider. (And keep in mind that internal hires are already a good fit with your culture.) Everyone should be welcome to the party no matter where they came from. Once they’re hired, turn your focus to how well you treat them. Make sure they are thoughtfully and successfully integrated, and tell them, specifically, how they fit into the success of your company.
- Persuade fewer people to apply. Cappelli recommends that, rather than filling a funnel with candidates and then weeding them out, employers should create a smaller, higher-quality pool of applicants, each of whom have associated costs. I agree, and would add that process is king in both attracting high-quality candidates and avoiding astronomical costs. Both companies and people are complex and winging it is not an effective substitute for process. You need a way to get objective observations of candidates and dig deep to see who fits best with your company culture. Processes allow you to gear up or gear down, hire a great candidate on the spot or take a few weeks to compare and decide. For most companies, the recruiting process is broken. There are many things that need to change in order to achieve better long-term results and get the right systems and processes in place.
- Revamp your interviewing process. Interviews are the most important factor in assessing cultural fit. They can be difficult to measure, mainly because companies often don’t take time to understand their own cultures. Saying “It’s too hard” is a copout. It’s critical that you understand your values and how they manifest in your current employees’ behavior. Then you can assess candidates against that insight. It requires discipline and consistency to build the metrics and capture the data, especially when you’re fiercely competing for talent and tempted to bring in anyone with a pulse. Don’t let “hard to do” create a deadly “good is good enough” workplace philosophy.
If “good” isn’t the right word to describe the candidates you are considering, the word “perfect” is downright dangerous. There is no perfect candidate. No one will be a perfect fit for the job or your culture. Don’t even try to look for perfection; I train that thought right out of people. Do you produce perfect work? Do you always do the right thing? Me neither. But with the right processes in place, you’ll get the best possible results.